MNRE issues tender for construction of India's first offshore wind projects

Offers seven locations off TN coast; cumulative capacity at 7 GW

The Union Ministry of New and Renewable Energy (MNRE) has issued a tender for the construction of India’s first set of offshore wind projects, offering them at seven locations off the coast of Tamil Nadu, with a cumulative capacity of 7 gigawatts (Gw). The ministry has appointed the National Institute of Wind Energy (NIWE) the nodal agency for conducting the bidding.

According to the tender notice, bids for 4.1 GW of projects will be issued in January 2024 and the balance in the next financial year. The notice has invited interested players to survey the proposed locations.

In a separate document enlisting the strategy for building offshore wind projects, the MNRE has suggested three models. Under Model A, necessary central financial assistance in the form of viability-gap funding (VGF) will be available to achieve a predetermined power tariff. Under Model B, offshore wind sites demarcated within identified zones would be allocated for a fixed period on lease through a single-stage, two-envelope bidding, and there will be no central financial assistance. Under Model C, either the wind sites would be awarded through a bidding process on a lease/allocation fee or revenue-sharing basis.

They might also follow tariff-based competitive bidding in the case of power procurement by power distribution companies or central or state governments.

The first batch of projects being tendered will follow Model B. The bidding will follow a ‘single-stage, two-envelope’ system wherein the bidders will submit techno-commercial and financial bids, respectively. For the projects, the seabed area would be leased to the project developers for a period of five years, said the tender, which was reviewed by Business Standard. The projects are required to be commissioned within the same five-year timeframe. The five-year lease period will be extended by a further one year, on a case-to-case basis, said the ministry. The lease rentals/site allocation fee will have a minimum floor price of Rs 1 lakh per sq km per year for the offshore sites.

The sale of power from the projects would be through “open access, third-party sale, and sale through power exchanges or for captive consumption”, the notice said. Renewable energy credits, carbon credit benefits are also proposed for offshore wind projects.

The Centre has offered grid evacuation infrastructure up to the offshore substation as part of the Inter-State Transmission Network (ISTS), to be built by state-owned Power Grid Corporation of India (PGCIL). “Concessional customs duty on the import of critical components for manufacturing wind turbines is proposed to be extended for offshore wind manufacturing, similar to what is presently available for onshore wind turbines,” said the notice.

Tamil Nadu and Gujarat have been identified by the Centre for the development of offshore wind power projects in the country. According to estimates by the government, as many as 14 locations are identified in Tamil Nadu that may have the potential to generate around 25 GW of wind energy. According to industry estimates, the cost for setting up 1 megawatt of offshore wind power will be Rs 8-10 crore. 

With inputs from Shine Jacob